The answer could determine your library's future

As libraries battle popular search engines and Internet research services for users, the new book The Ultimate Question by Fred Reichheld says that one simple question determines an organization’s future: Would you recommend us to a friend? Learn more about this one-question survey and the latest efforts in library customer service and assessment.

By Tom Storey

After more than 25 years of studying customer loyalty, consultant Fred Reichheld discovered that one simple question largely determines an organization’s future: Would you recommend us to a friend?

The book The Ultimate Question says that one simple question determines an organization’s future: Would you recommend us to a friend?

Forget about expensive market research. Forget about fancy tools that crunch data. Forget about the customer satisfaction survey. All of them are complicated, biased and confuse customer transactions with customer relationships.

Only one question matters. Reichheld calls it The Ultimate Question, and the metric it produces is the Net Promoter® Score (NPS).

In January 2006, Reichheld published the book The Ultimate Question, which recently ranked #1 on the Wall Street Journal and USA Today business best-sellers lists. The book drove interest in Net Promoter Scores, so Reichheld teamed with Satmetrix Systems, a leading customer experience management (CEM) software company, to launch the netpromoter.com Web site and blog. The inaugural Net Promoter Conference will be held January 31 and February 1, 2007.

Reichheld is rolling out The Ultimate Question to organizations searching for a simple process that measures the customer experience and links it directly to revenue growth. He has a number of big-time clients—General Electric, BearingPoint, American Express, Microsoft, Intuit—who rely solely on NPS to gauge their reputations in the marketplace. GE has even tied executive bonuses to NPS.

Furthermore, although developed for the business world, The Ultimate Question and NPS can be used by anyone interested in measuring the state of customer satisfaction and proactively fixing problems, says Reichheld.

“Schools, hospitals, charities, government agencies—organizations of any kind—can put these ideas into practical use,” he says. “Nonbusiness organizations also have customers; they need to delight the people they serve, and they too can benefit greatly from the use of one simple metric.”

How does The Ultimate Question work?

Using the phone, the mail or the Internet, organizations send out a one-question survey that asks: On a scale of 0-10, how likely is it that you would recommend us to a friend or colleague? Promoters score a nine or 10 and are loyal enthusiasts who keep buying from a company and urge their friends to do the same. Passives receive seven or eights and are satisfied but unenthusiastic customers who can be easily wooed by the competition. Detractors are the rest: unhappy customers who feel ignored or mistreated and plot to get even. The Net Promoter Score is calculated by subtracting the percentage of detractors from promoters.

Fred Reichheld is a Bain Fellow and Founder of Bain’s Loyalty practice that helps clients achieve superior results through customer, employee, partner and investor loyalty. “Nonbusiness organizations also have customers; they need to delight the people they serve, and they too can benefit greatly from the use of one simple metric.”

Often, companies add a follow-up question—If you would not recommend us, why not?—to identify the most pressing issues with detractors.

For General Electric, The Ultimate Question survey revealed poor scores and stinging feedback for its Capital Solutions group, which provides business loans and leases. In response, GE streamlined its loan process and won back detractors. Complaints were increasing and market share was slipping when Intuit’s TurboTax used The Ultimate Question. They found that tech support was the major problem, so the company boosted staffing levels and returned all phone tech-support functions to the United States and Canada. IPower, a Web hosting company, discovered that about 40 percent of its clients were detractors who wouldn’t recommend them. They opened a new service center with 185 employees to answer customer calls quickly and their NPS score is on the rise.

How do companies stack up?Those with the most efficient growth engines—companies such as Amazon.com, eBay, Costco, Vanguard and Dell— operate at NPS efficiency ratings of 50–80 percent. In recent research done by Reichheld and Satmetrix, Apple, Google and Symantec—companies well-known for their market performance and brand leadership—had the highest NPS scores in the high-tech industry.

But the average firm sputters along with an NPS rating of 5–10 percent. In other words, promoters barely outnumber detractors. Many firms—and some entire industries—have negative Net Promoter Scores, says Reichheld, which means that they are creating more detractors than promoters day in and day out. These abysmal scores explain why so many companies cannot deliver sustainable growth, no matter how aggressively they spend on acquisitions, advertising, promotion, research and development or customer satisfaction.

Can a one-question survey work?

Reichheld did his homework. Over a 10-year period working with Bain & Company, Reichheld gathered financial and market data from numerous companies and industries to put his theory to the test. He found that in most industries, companies with the highest Net Promoter Scores grow at more than twice the rate of the competition. Companies that achieve long-term profitable growth have Net Promoter Scores two times higher than the average company. These companies also spend much less on marketing and new-customer acquisition than their counterparts.

Reichheld also tested the classic customer service questions: how satisfied are you, does this organization set a standard of excellence, does this organization deserve my loyalty. His results? The question with the highest “R²”—the highest relationship to growth—was “Would you recommend us to a friend?” There was no correlation between growth and the fleeting attitudes expressed in traditional satisfaction surveys.

In addition, it appears that The Ultimate Question and NPS scores uncover the true feelings of customers. Firms that had NPS ratings of 5–10 percent were receiving satisfaction scores of 80–90 percent in their market research, Reichheld says. Follow-up research verified that 80 percent of customers who left for a competitor were “satisfied.”

“In short, companies that measure success primarily through the lens of financial accounting tend to conclude that loyalty is dead, relationships are irrelevant, and the treatment of customers should be governed by what seems profitable rather than by what seems right,” says Reichheld. “Managers focus on profits regardless of whether those profits represent the rewards from building relationships or the spoils from abusing them.

“Ironically, customer loyalty provides companies with a powerful advantage—a battalion of credible sales and marketing and PR troops who require no salary or commissions. Yet the importance of these customer promoters is overlooked.”

The state of library customer service

Ever since the Royal Library of Alexandria was founded in the Third Century B.C., libraries have been in the business of providing information and serving people. Today, however, they are under mounting pressure to show their effectiveness and quantify their value in order to justify funding or requests for increased funding.

Libraries are clearly seen as trusted sources of information. -Perceptions of Libraries and Information Resources

Up against popular search engines and Internet research services, libraries are battling to prove their worth and grow a vibrant community of loyal promoters and dedicated users during a period of rapid and unpredictable change in libraries and the information environment, as well as a fundamental shift in how scholarly information is found and used.

Based on results from OCLC’s groundbreaking report, Perceptions of Libraries and Information Resources, libraries have work to do regarding customer service. The customer service category yielded the highest number of negative associations in this benchmark study of 3,348 library users in the United States, Canada, United Kingdom, Australia, Singapore and India.

When asked to provide in their own words two positive and two negative associations about libraries, 2,985 respondents provided 4,793 negative comments; negative customer service associations outnumbered positive associations 1,106 to 238. Limited library hours was the most cited negative association;
fees, inflexible return policies and other policy issues also were cited. Other frequently cited negative associations related to facilities and environment and included noise levels, crowds, parking and library location.

The study also indicated that the majority of library users now start—and often conclude—their information searches via Internet search engines. The data indicated that users are satisfied with these new, Internet-based information services, believing them to be fast and accurate, and that they provide quality information and fit their lifestyles. While libraries are clearly still seen as trusted sources of information, many respondents also indicated that search engines have also become trusted sources of information.

Steve Hiller has been active in library assessement for 15 years and has presented and published widely on a number of assessment-related topics. “We still have a long way to go but since 2000 libraries have made great strides in becoming more customer focused.”

As these results suggest, the world has changed, says Steve Hiller, Director of Assessment and Planning, University of Washington Libraries. Libraries are in a very competitive environment in the digital age.

“We are no longer the only information game in town, if we ever were,” he says. “Our communities have access to a vast array of information that we couldn’t even dream of ten years ago. The structured and controlled access to the world of information that libraries established during much of the 20th century has literally been blown away.”

Hiller says that massive general search engines, such as Google and Yahoo, are providing not only links to Web information but increasingly to physical and electronic content—books, journals, audio/visual materials and reference sources, which used to be the sole province of libraries. In addition, accountability has shifted from “are we spending our money efficiently and wisely” to “what difference does the library make?”

What is library assessment?

Hiller defines library assessment as a structured process to learn about communities and evaluate how well the library supports them. The information acquired through library assessment is used in an iterative manner to improve library programs and services and make libraries responsive to the needs of their communities. At the University of Washington Libraries, Hiller helped build a culture of assessment that aims to set new standards of excellence in service and customer relationships. Every three years, the library conducts a detailed survey to find out how students and faculty use libraries, what is important to their work, their satisfaction with libraries and their future needs. In 2007, it will conduct its sixth survey. Assessment information has been used to renovate and refocus UW libraries to better support undergraduates, make an early switch from print journals to online only, enhance resource discovery tools and Web site usability, implement standardized customer service training for all library staff, and stop doing activities that do not add value to customers.

Hiller also has been part of an Association of Research Libraries (ARL) effort to make assessment effective and sustainable. He and colleagues Jim Self at the University of Virginia and Martha Kyrillidou at ARL lead this effort, “Making Library Assessment Work: Practical Approaches to Developing and Sustaining Effective Assessment,” which focuses on evaluating assessment efforts and recommending ways of moving assessment forward. Twenty-four libraries have participated in the project, which involves a 1.5-day site visit and follow-up report with specific recommendations for each library.

Preliminary findings from their visits:

• Libraries are keenly interested in building a culture of assessment, collecting and using data for management, and demonstrating the library’s positive impact on teaching, learning and research.

• Libraries continue to keep lots of statistics, but rarely use them for management and service improvement.

• Library organizational structures and decision-making processes often are not set up in ways to facilitate change.

• External factors, such as accreditation, organizational review and budgets, are important motivators for assessment.

Limited library hours was the most cited negative association. -Perceptions of Libraries and Information Resources.

“Right now, few libraries have the skills to implement an effective program,” Hiller says. “Most aren’t asking the right questions and are unsure about what to do with the data they have or how to collect information they need.”

Library assessment: job #1

Still, it appears that assessment is gaining momentum and libraries are gearing up for the customer service challenge. Some evidence:

• More than 1,000 libraries worldwide have used LibQUAL+™, a service-quality evaluation survey developed by ARL that is relatively inexpensive and easy for libraries to implement, Hiller says. Participating libraries have gathered more than 750,000 survey respondents, an excellent first step into assessment and service quality measurement.

• Registration at the first North American conference ever on library assessment in September closed weeks before the event due to the overwhelming response from libraries. The conference proved so successful that a second one has been scheduled for Seattle in August 2008. Additional information about these conferences can be found at: www.arl.org/stats/laconf/index.html.

• Libraries are increasingly dedicating staff to customer service and assessment. More than half of the libraries Hiller and Self visited as part of their consulting now have an individual identified while most others have a group focused on assessment and service quality.

• Integrated library systems have developed modules that can provide detailed information on collection usage so that libraries can keep much better track of what’s being used.

• Publishers and third parties are providing much better information on the use of virtual resources using standardized and consistent methods.

Hiller says the greatest impact of the emerging library assessment field has been on library space—both virtual and physical. Several libraries that participated in the ARL project used negative survey responses to library space to bolster their cases for getting new or extensively renovated space.

“Usability is a great success story as it incorporates direct user input into Web design and content. On the physical side, much of the major renovation work or new construction in libraries has incorporated the customer focus. Such methods as observation, surveys, focus groups, interviews, wayfinding and furniture ‘usability’ are becoming standard tools for ensuring that our facilities are attractive but also address the needs of our customers.”

Clearly, Hiller says, libraries are well on their way to establishing a learning community for library assessment and dynamic customer service function. And the timing couldn’t be better.

“We still have a long way to go, but since 2000, I believe libraries made great strides in becoming more customer-focused. Certainly competition and accountability play major roles. However, awareness of the value of good customer service and better tools to help assess use, user satisfaction and needs have played an equally important part.”

“Assessment is an integral tool to understand our customers’ needs and preferences,” Hiller says. “How can we tailor our facilities, services and resources to better support them and in the process define what libraries can do better than anyone else?”

In OCLC’s Perceptions of Libraries and Information Resources survey, respondents suggested that libraries reexamine the rules and fines/fees associated with library materials.

Updates | Imaginative advocacy: Amy Affelt